Key Takeaways
- Delaware recognizes seller agency, buyer agency, dual agency, and designated agency
- Agency relationships in Delaware are created through written agreements
- The Agency Disclosure form must be provided at first substantive contact
- Licensees owe fiduciary duties of loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care to clients
- Delaware requires written disclosure of agency relationships before substantive discussions
Delaware Agency Relationships
Delaware law governs how real estate licensees represent buyers and sellers in transactions.
Types of Agency Relationships
Delaware recognizes the following agency relationships:
| Relationship | Description |
|---|---|
| Seller/Landlord Agency | Broker represents the seller's or landlord's interests |
| Buyer/Tenant Agency | Broker represents the buyer's or tenant's interests |
| Dual Agency | Broker represents both parties (with consent) |
| Designated Agency | Different licensees in same firm represent different parties |
| Transaction Broker | Facilitates transaction without representing either party |
The Broker as Agent
In Delaware, the broker is the agent of the client. Salespersons and associate brokers are:
- Licensed through the broker
- Acting on behalf of the broker in transactions
- Agents of the client through the broker relationship
Creating Agency Relationships
Agency relationships are created through written agreements:
- Listing Agreement - Creates seller/landlord agency
- Buyer Agency Agreement - Creates buyer/tenant agency
- Dual Agency Consent - When representing both parties
- Designated Agency - Within same brokerage
Key Point: Before discussing confidential information or showing properties, the agency relationship should be established or disclosed.
Fiduciary Duties
Delaware licensees owe clients the following fiduciary duties (remembered as OLDCAR):
| Duty | Description |
|---|---|
| Obedience | Follow lawful instructions |
| Loyalty | Put client's interests first |
| Disclosure | Reveal all material facts |
| Confidentiality | Protect private information |
| Accounting | Handle funds properly |
| Reasonable Care | Act competently and diligently |
Duties to Non-Clients (Customers)
Even when not representing a party, Delaware licensees owe:
- Honesty - Cannot make false statements
- Fair dealing - Must treat fairly
- Disclosure of material defects - Must reveal known property issues
- Answer questions honestly - Cannot mislead
Transaction Broker
A transaction broker provides services without representing either party:
- No fiduciary duties
- Limited to facilitating the transaction
- Must still be honest and disclose known defects
- Must provide Agency Disclosure
Agency Disclosure Requirement
Delaware requires an Agency Disclosure form to be provided:
| Timing | Requirement |
|---|---|
| When | At first substantive contact |
| Format | Written form |
| Content | Explains agency relationships and options |
| Acknowledgment | Consumer acknowledges receipt |
What the Agency Disclosure Contains
The Agency Disclosure explains:
- Types of agency relationships available
- Duties owed to clients vs. customers
- How agency is created
- Consumer's right to choose representation
- Dual agency and designated agency options
When Agency Disclosure is Required
| Situation | Agency Disclosure Required |
|---|---|
| Showing property to potential buyer | Yes |
| Taking a listing | Yes |
| Open house (substantive contact) | Yes |
| Responding to inquiries | Yes |
Exam Tip: The Agency Disclosure must be provided at FIRST SUBSTANTIVE CONTACT, not after showing property or discussing needs.
Compensation vs. Agency
Important: Compensation does not determine agency.
| Situation | Agency |
|---|---|
| Seller pays buyer's agent | Buyer agency still exists |
| Commission split | Does not create agency |
| Cooperating broker paid by listing broker | May still be buyer's agent |
The written agency agreement, not the source of compensation, determines who the licensee represents.
When must a Delaware licensee provide the Agency Disclosure?
What is a transaction broker in Delaware?